340. You said earlier that Scotland and Wales
are continuing with the scheme, they organised it differently
and do not feel they need to suspend it. Does that raise a question
of who in England is responsible for taking the wrong decisions
and not organising the scheme in a way which was better scrutinised
and more accountable?
(John Healey) There are two things there, if I may,
Mr Holmes. In England, it means that I am responsible for accounting
for the decisions that we are taking and the action we have to
put in place and then the work that needs to be done on any redesign
scheme. A point of clarification. When we announced in England
the withdrawal of the scheme as of 7th December, as I explained
earlier, they took the decision in Scotland because it is a devolved
function and they took the same decision in Wales that they would
continue with their ILA scheme. Northern Ireland, they took the
same decision as we did. Now with the fresh serious allegations
of fraud and theft that led us to the decision to stop the programme
and to stop the operation of the ILA centre, the consequences
for now are that in Scotland there is no ILA provision at present
because Scotland ran its scheme through the Capita run ILA centre.
In Wales the programme is continuing because that is administered
through the old TEC network. Just for a point of clarification
I hope that is helpful.

341. In reviewing what went wrong with the initial
scheme and presumably setting up a better scheme to replace it,
what advice are you taking? For example, as recently as yesterday
the Association of Computer Trainers have asked how will the DfES
consult with the legitimate training industry to learn from the
experts how funded training can and should operate and when will
that consultation process begin. Now that seems to imply, if that
is correct, that you did not consult with the training industry
when the scheme was set up and up to now they do not think you
have consulted with them on how to improve the scheme?
(John Healey) I did point out to the Committee earlier
on that we consulted very widely, including staging several workshops,
to which commercial providers were invited in the run up to the
design and launch of the scheme last year. I did explain, also,
that I think the Committee will appreciate the first and overriding
priority for us in this recent period has been to manage the planned
closure of the programme and then respond to the difficulties
which arose at the end of last week. However, I can tell Mr Holmes
and the Committee that we have already had discussions with some
learning providers. We have already encouraged those that have
expressed an interest in commenting on and helping us with the
redesign of the scheme to let us have their details. We have got
quite a large list of the commercial providers and a range of
other organisations who want to help us on that task and we plan
a programme to involve them over the next few months. I have to
concede we have not yet finalised the detail of how we will do
that but we will do that.

342. When you say over the next few months,
that brings us back to the question that is particularly affecting
the smaller training providers, those we talked about earlier,
I can think of one in my constituency, an excellent programme
and they may well go to the wall because of this. What is the
timescale for reintroducing a new system, an improved system,
a radically changed system or whatever it is so that the smaller
training providers know what scale they are operating on as to
whether money will come back on stream?
(John Healey) It is simply too early to give you a
firm answer on that. The scale of the policy work, the degree
of consultation that you are encouraging us to undertake, means
that we have got a lot of work to do. The implications of the
current problems that we are dealing with and the lessons that
we will need to learn from that also may have a bearing. I regret
it but I am simply unable to give you a firm timescale on when
we believe, first of all, we can redesign and, secondly, reintroduce
a successor scheme to the current individual learning accounts.

343. It could be many months, well into next
year?
(John Healey) I simply cannot give you a firm timetable,
if I could I would.

Chairman

344. This is concerning the Committee, Minister.
Here is a flagship project of the new Labour Government backed
by the Chancellor and here it is stranded on a rig and we have
got no idea whether it will be refloated or whether it will be
sold for scrap. It is worrying to this Committee that this is
a very important core of your responsibility and of the Government's
education policy. I am getting a feeling that we are not getting
a feeling of urgency on the part of the Department.
(John Healey) I think the Committee, Chair, is right
to be very concerned about this and to be scrutinising it very
closely. If I may say so, I am in the same position. I think the
Committee should not be left with doubt that there is a strong
commitment. The Secretary of State in the Commons Chamber described
the cast iron commitment to the future funding and reintroduction
of a successor scheme. I think her commitment in the Chamber,
and I think the commitment that I think I have repeated today,
ought to give you at least a certainty that is what we are working
on. In terms of urgency, I have to say the sort of response and
the effort that officials in the Department have been putting
in to dealing with the difficulties that we have to deal with,
and at the same time pursuing the work that we have to plan in
order to redesign before we can relaunch any scheme is heroic.
I really would contest the idea that somehow we are failing to
act on any front in this territory without urgency.

Mr Shaw

345. My first point is about the infrastructure
in the private sector, which is absolutely vital if the Government
is going to deliver on increased skills and training. I understand
that the ILA centre has closed now. A website has a message on
saying it is closed and there is a message on the answer phone
saying it is closed. Who do training providers contact? You are
responsible, do you provide them with a phone number? Can they
ring you?
(John Healey) You are right, Mr Shaw, the ILA centre
is closed. There is the latest information we are able to provide
on the website and that was updated yesterday. The call centre,
which unlike the ILA operating centre, is based in Coventry is
open for business. We opened that yesterday. Clearly the information
they can give out is limited as well but that is operating. That
is principally a service for individual learning account holders
but learning providers are also contacting it. As soon as I am
able I will write directly to all learning providers, as I have
done before, to update them as fully as I can about where we are.
Because the ILA centre is closed and their operations at the moment
are closed, I cannot get access to the registered list of learning
providers in order to write to them personally which is what I
will do as soon as I can.

346. You will understand the frustration of
many providers.
(John Healey) Yes.

347. They want to remain in the market place
for any future programme. Do you agree a number of these organisations
have expanded on the basis of ILAs. You said earlier "This
is business". If I was a training provider and I went to
my bank manager and said "This is my business plan, we are
going to use ILA" I would have thought that was a fairly
reasonable and sound source of revenue. Any business plan has
to demonstrate its source of revenue and you were rather dismissive
of it.
(John Healey) I did not mean to be or to sound dismissive.
The contribution that the vast majority of good learning providers
in the public and private sector and voluntary sector too have
made to the success of this scheme is enormous. They really have
used this to reach learners that have not come near learning for
many years. If I was strong in statements earlier it is because
I want to be clear. I do not want to mislead any learning provider
that might be either listening to the Committee's proceedings
or subsequently to read a transcript of the proceedings and them
to be under any impression that somehow there is provision that
we can make to support their business as a result and in the immediate
aftermath of having to withdraw the scheme. If I have been tough
about that it is because I do not want anyone to mistake what
I have said or to be misled that somehow it can be a lifebelt
of public money which will continue to support their operations.

348. One of the reasons on 24th October the
Secretary of State announced the accounts were going to be suspended
was because the programme had exceeded the Government's expectations,
that was one of the key factors at that point. In the 2001 DfES
Forward Strategy document, Delivering Results, one of the
milestones by 2002 was to expand the individual learning accounts.
I wonder what is happening here? Are there two different offices:
"Let us go, let us have more." "No, no, no, we
have got too many". Perhaps you can answer that point. I
think the key issue then is what were the original costings for
the individual learning accounts and when and if it exceeded that?
Was that the point of saying it had been too successful? You came
from the Treasury "We have blown the budget, guv". In
someone else's writing "Well, let's expand it" and perhaps
when you arrived you said "I have got the figures. Gordon
says we can spend this much". Can you see the contradiction
here?
(John Healey) Three things there, Mr Shaw. The budget
for the ILA scheme last year was £56 million, this year it
is £71 million.[2]
Clearly, because it was a scheme that was innovative, we simply
did not know how it was going to work. It was not capped in any
way, we did not know how it was going to go. I can go over this
ground again but I think I have dealt with this issue of the fact
that our principal reason was the concern about misuse. There
was a budgetary element to that as well, particularly where the
two combined because the volume of the small minority of providers
we were worried about in the business that they were conducting,
and the public funds they were drawing down during that period,
particularly September/October, was such that the cost to the
public purse and the concern that this was money misspent was
such that it made us take that route.

349. Has the budget been exceeded?
(John Healey) The budget has been exceeded.

350. By how much?
(John Healey) The budget has been exceeded because

351. By how much?
(John Healey) We are certainly not in a position to
say that at the moment because we are still processing payments.
People are still able to claim their discounts, as you will know.
You can claim your discount for learning up to six months after
it has been booked.

352. You do not know how much the budget has
been exceeded by but at the same time you have written a booklet
here that you want to expand?
(John Healey) There is no contradiction, if I may
say so, Mr Shaw, between that booklet which sets the long term
aim and the place that such a scheme has in our ambitions to develop
life long learning and opening up opportunities for individual
learners who simply are not taking up learning at present. With
the decision that we had to take and the action we had to take
to deal with the problems which are in the system at the moment,
that long term commitment is the context within which I have given
you the undertaking and the Secretary of State has given you the
undertaking that there will be a successor scheme. In terms of
the budget, implications of both the misuse and the overrun of
activity against what might have been anticipated is such that
we simply at this stage cannot know for certain what that would
be. We are tracking it very carefully but our scheme was designed
and the budgets were set in order to reach one million ILA account
holders in March 2002. We hit that a year early. At the end of
October there were 2.5 million and I have made it clear to the
Committee that the budget was not the principal problem.

Chairman

353. Minister, what you are being asked by Jonathan
Shaw surely is there must have been an estimate of how much this
would cost year on year, an estimate. He is just asking what sort
of level of overshoot is there? You have said a million and you
went through two and a half million much faster than you thought.
What are the ballpark figures you are knocking around the Department
on this?
(John Healey) I have explained the budget allocation
against the anticipated activity which was obviously set before
the scheme was launched in September last year nationally. I am
sorry to give you an answer that you feel is frustrating as a
Committee. At the moment because of the uncertain number of individual
learning account discount payments we are going to have to pay
we simply cannot give you a sense, even a ballpark I regret to
say, of what the possible overspends are going to be.

354. Minister, in the Department of Education
it is our job to check you are looking after public money in a
careful and proper way. You are going to get a bigger grilling
on this from the Public Accounts Committee than we are ever going
to give you. The fact is you are saying in the Department you
did not know how much money you were spending on this and it was
getting out of control. Then you fall back and say "The reason
we pulled the plug was not because the spending was out of control"
you are saying it was because of fraud.
(John Healey) Chair, I know how much as a Government
we were paying out during the course of those months in September
and October. What I cannot answer is the question Mr Shaw asked
which is how much are we overspent by.

Mr Shaw

355. When will you know?
(John Healey) If I may suggest a way forward. I am
conscious of the proper role of this Committee, I am conscious
of the proper role of the Public Accounts Committee in asking
those questions. If I may suggest a way forward, I will go back
to the Department and I will work through what we have got as
activity data at the moment, our best anticipation of the sort
of payments that are in the pipeline that we have undertaken that
we will honour and I will do my best to let the Committee have
some indication of the sort of overspend on the budget that was
originally allocated. I must stress the degree of uncertainty
and envelope for variation there is quite wide. If the Committee
will accept that caveat to those figures I will get that work
done and submitted to you.[3]

Chairman: Thank you, Minister.

Mr Shaw

356. Just one final question. Is the person
who is responsible for checking the financial regularity of the
ILAs still working in the Department?
(John Healey) There are checks on the regularity of
the system at all points right through the ILA centre run by Capita
and beyond. There is not one person who ticks or signs off the
payments in that way. With a system as complex and large scale
as this I do not think you can isolate that to one person.

357. You do not know how much you have overshot
by, you do not know who is responsible, am I being too crude here?
You are saying it is very complex, does the problem lie there,
nobody knows what is going on? It seems to stumble from chaos
to disaster.
(John Healey) No. To look for an individual who is
responsible for signing off the financial payments is not possible
in this system. To look for one person who is responsible for
the way it is being managed and the action that is being taken
is very clear, that is me. If you are not satisfied with that
then I will have to answer to you and to others for that.

Valerie Davey

358. Can I change the slant in as much as of
course reconstructing business plans and refinancing business
is going to be a huge problem but how are we going to rebuild
the confidence of those many ILA holders who have come back to
learning in their forties and fifties for the very first time?
Last week there were representatives from trade unions, education
officers in this building explaining, literally with tears in
their eyes, how people had come in through the door in the premises
where they had been working for years with inadequate skills,
with no interest in education and for the first time ever they
had started on a course which is now being pulled. That personal
dilemma is to me as important as all the very significant issues
which have been raised in this Committee today. How are we as
a Government going to apologise to those people and I agree we
have now got a guarantee there will in time be other courses,
how will we restore that confidence, that knock that has been
given to people in their forties and fifties especially who for
the first time thought this Government was going to give them
something they never dreamt they would ever have?
(John Healey) If I may say so, I think it is one of
the big challenges we face in trying to reconstruct an ILA style
scheme and reintroduce it. The question of confidence in the system
which has also been made for providers as well as individuals
is significant. It is not the only support that is available,
even to older learners. It is not the only source of information
and funding support either. If you are in a position where you
are having to advise individuals, including constituents on this,
a good first point of call for them is the national learning direct
information and advice line. They will be able in the interim
to give individuals information about the sort of courses that
might suit them and possible sources of funding to support that
learning.

359. That is useful. How do we get it to those
people urgently, people who have never been able to take that
individual initiative? We were told, for example, in a firm that
up to now something like 10 or 20 people might have in individual
ways made progress with their learning. Now 300 after work in
the same building together are appreciating the potential that
they might have. Are there any ways of interim support for a group
like that via a trade union? If you are saying to me, as I think
you said fairly bluntly, there is no Government money in the interim,
then I think they need to be told. Is there any way of you as
a Minister getting through, one letter to such people with an
apology. I think they would be overwhelmed almost to say somebody
in the Government was apologising for the position they are now
in and assuring them, not with a date, but at some stage this
will be reconstructed?
(John Healey) To some extent we may have covered that
ground. I am not sure if Ms Davey is aware that at the end of
October we wrote to 2.5 million ILA account holders. We explained
the decision we had to take to NV schemes. We gave them information
about how up until December 7th they could still draw down the
discounts. We made it clear also how difficult and regretfully
we made that decision. In terms of rebuilding confidence and knowledge
of any future scheme when we are in a position to launch that
we will inform them. I think what you draw my attention to is
really a significant part of what we need to plan for which is
a proper promotion of any successor scheme and possibly a special
exercise to contact those who have held ILA accounts to date to
explain what we have got in mind. We do not propose at this point
to do another letter to all 2.5 million, it was an exercise which
was three weeks, as you will appreciate and a substantial cost
to get out but at that time I took the decision it was something
we should do.

Valerie Davey: Can I thank you very much. I
did not know the individuals had had that letter, I appreciate
that enormously. I think that is well done. I would urge you to
keep those very people in mind as you are intimating as these
schemes are reconstructed because they are the very ones who need
that reassurance.